The Tesla Model S drive unit warranty has been increased to
match that of the battery pack. That means the 85 kWh Model S,
our most popular model by far, now has an 8 year, infinite mile
warranty on both the battery pack and drive unit. There is
also no limit on the number of owners during the warranty
period.

Moreover, the warranty extension will apply retroactively to
all Model S vehicles ever produced. In hindsight, this should
have been our policy from the beginning of the Model S
program. If we truly believe that electric motors
are fundamentally more reliable than gasoline engines, with far
fewer moving parts and no oily residue or combustion byproducts
to gum up the works, then our warranty policy should reflect
that.

To investors in Tesla, I must acknowledge that this will
have a moderately negative effect on Tesla earnings in the
short term, as our warranty reserves will necessarily have to
increase above current levels. This is amplified by the fact
that we are doing so retroactively, not just for new customers.
However, by doing the right thing for Tesla vehicle
owners at this early stage of our company, I am confident that
it will work out well in the long term.

Reading between the lines a bit, Tesla could be making this move
due to some recent, negative long-term reviews of the Model S,
notably from Consumer Reports. Hence my emphasis: Tesla
does believe that electric motors are better and in fact
thinks that it's solved most of the problems that showed up in
early production versions of the Model S.

The "infinite mile" language is of course brilliant on Musk's
part, as traditional carmakers define the mileage on their
warranties.